What Home Depot actually does
Home Depot is the largest home-improvement retailer in the United States. It sells tools, building materials, appliances and services through large stores and online, and it is part of the Dow Jones Industrial Average. It was founded in 1978 in Georgia and is headquartered in Atlanta.
Its customers fall into two groups: do-it-yourself homeowners and professional contractors, who buy in larger quantities and are especially valuable.
How the business makes money
Home Depot earns a margin on a wide range of products and also on services and rentals. Scale gives it strong buying power and a large selection. In recent years it has expanded into supplying professionals more broadly through acquisitions.
Demand follows the housing market: home sales, remodelling and the age of the housing stock all matter.
The dividend story
Home Depot pays a quarterly dividend and has raised it regularly, with a payout that grows with profit. The yield is usually modest, because the share price has risen over time.
It is a good example of a dividend growth stock rather than a high-yield one. Our guide on dividend growth vs high yield explains the difference.
What to keep an eye on
- Interest rates and housing. High rates slow home sales and big renovations.
- Consumer confidence. Large projects are postponed when people feel uncertain.
- Competition. Lowe’s and online sellers compete for the same customers.
- Debt. The company borrows to fund buybacks and dividends.
Quick take
Home Depot is a high-quality retailer with a growing dividend that is closely tied to the housing cycle.